The United States is promoting a series of policies and regulations in the field of warships and shipbuilding. The Korean shipbuilding industry plans to take this opportunity to actively grab orders to replace China and return to the “global first” position.
On March 2nd, the Korea Trade-Investment Promotion Agency (KOTRA), a non-profit trade promotion organization under the South Korean government, released a report titled Opportunities and Policy Trends for Korean Companies Entering the U.S. Shipbuilding Market. The report, authored by KOTRA’s Washington Trade Office, analyzed the laws and policies related to the U.S. shipbuilding industry announced before and after the inauguration of the Trump administration’s second term. It also explored the opportunities and impacts these developments bring to the South Korean shipbuilding industry.
The report notes that the U.S. Navy is expected to spend an average of about $30 billion a year by 2054 to procure new warships, according to a January report by the Congressional Budget Office (CBO). The U.S. has set a goal to expand the current 296 warships to 381 in 2054, which means that 364 new warships will need to be built over the next 30 years, an average of 12 new ships per year.
The report focuses on the Ensuring Naval Readiness Act and the Ensuring Coast Guard Readiness Act recently introduced in the U.S. Congress. If the bill is passed, South Korean shipbuilders will have the opportunity to take orders for U.S. Navy warships as well as Coast Guard vessels. This is due to the U.S. in the early years to protect their own shipbuilding industry to develop the negative impact of the Jones Act, resulting in the gradual decline of the U.S. shipbuilding industry, the technological advantage is no longer, the U.S. need to seek cooperation with South Korea and other allies.
According to the report, Korean shipbuilders also have opportunities in the warship maintenance, repair and overhaul (MRO) market. The U.S. Navy currently deploys 149 warships (excluding submarines and aircraft carriers) and needs to invest $6 billion to $7.4 billion annually in the MRO business for these ships. However, the U.S. domestic shipyards are insufficient, aging equipment, low production efficiency and other issues lead to a serious lag in the maintenance of warships. The U.S. Navy’s 7th Fleet, which is responsible for the Indo-Pacific region, operates its own maintenance center in Japan, but is still struggling to meet the growing demand.
Currently, South Korea and Japan are in fierce competition for the growing U.S. warship MRO business. In July last year, Korean companies such as HD Hyundai Heavy Industries and Hanwha Ocean signed a Master Ship Repair Agreement (MSRA) with the U.S. Navy, winning the “entry ticket” to the U.S. MRO business.
Hanwha Ocean has successfully won the MRO contract for a 30,000-ton replenishment oiler for the 7th Fleet of the U.S. Navy in November last year. Last month, Hanwha Ocean and HD Hyundai Heavy Industries each announced their intention to participate in the MRO bidding for a replenishment oiler for the 7th Fleet of the U.S. In 2025, Hanwha Ocean has set a target of taking orders for 6 U.S. MROs, while HD Hyundai Heavy Industries plans to take orders for 2 – 3 ships.
The report points out that there are also potential opportunities for the Korean shipbuilding industry in terms of merchant ship orders. The U.S. Congress recently proposed the SHIPS for America Act to strengthen the U.S. shipbuilding industry, which contains a strategic plan to expand U.S.-based merchant ships from 93 to 250 ships.
The bill also provides a series of incentives, such as annual financial loans and guarantees of 250 million U.S. dollars, up to 40.5% investment tax credits, etc., South Korean shipbuilding enterprises are expected to benefit from. Meanwhile, the U.S. has promoted the expansion of domestic oil and gas production, restarted LNG export approvals, and pushed forward the Alaska LNG development project, which has led to an increase in the demand for LNG carriers and drillships, creating more business opportunities for the shipbuilding industry.
It is worth mentioning that recently, South Korean Minister of Ministry of Trade, Industry and Energy of South Korea (MOTIE) Ahn Duk-geun held talks with U.S. Secretary of Commerce Howard Lutnick in Washington, D.C., to request a tariff exemption from the U.S. side. The two sides exchanged views on shipbuilding cooperation and agreed to establish a working-level consultation channel on tariff measures.
Ahn Duk-geun said that South Korea is willing to balance bilateral trade by expanding imports of natural gas, crude oil and other energy sources from the United States. The two sides focused on shipbuilding and other industrial cooperation in-depth exchanges. Anderson said that in order to implement the shipbuilding cooperation that Trump personally “named”, South Korea will set up an inter-departmental task force to prepare for systematic cooperation at the government and civilian levels.